For as long as I can remember, there has been a continuing effort to remake Downtown Toledo and keep it a viable center for Lucas County and Northwest Ohio.
The late 1960s saw the building of the 30-story Fiberglas Tower, the 15-story Toledo Edison Building and the 19-story, 256-room Holiday Inn located at the southwest corner of Summit Street and Jefferson Avenue. Things were looking up in Toledo.
In June 1969, Charles McKelvy Jr., president of Downtown Toledo Associates, announced that construction of a new hotel was ready to begin. The opening of the first new Downtown hotel in 40 years was an important step in the revitalization of the city’s Downtown and riverfront area and was an important prerequisite for the building of a Downtown convention center.
In July 1979, the original owners of the Holiday Inn Downtown transferred ownership of the hotel to five local institutions that helped finance the project from its construction to present. The hotel had financial problems for years, due in part to the fact that the anticipated Downtown convention center had not been built. A new management firm was named to operate the hotel. McKelvy said the new owners considered the property economical and important to the continued revitalization of Downtown. Plans for repairs and improvements were made to keep the operation competitive.
After that sale in 1979 the hotel was sold 10 more times, had seven name changes and was last known as the Hotel Seagate. Due to burst water pipes in early 2009, the hotel was forced to close for repairs that April and it did not reopen. The owners failed to do the necessary maintenance, repairs and upgrades to keep the property desirable. For three and a half years the structure was left unattended and, already in bad shape, began to severely deteriorate.
During his term as mayor, Mike Bell made several trips to China to encourage investment in Toledo. Chinese firms purchased the Marina District and The Docks restaurant properties on the east side of the Maumee River. The Downtown Park Inn Hotel (now Park Inn by Radisson) was purchased by Chinese interests in September 2011. Then the Hotel Seagate was sold, for the ninth time, in November 2012 to what was reported as a Chinese investment firm unrelated to the purchasers of the Park Inn.
With new ownership and fresh money, it seemed the Hotel Seagate would be renovated to operational status and would reopen for business. But who were the new owners? The hotel was purchased through Louisville Title Agency, which acted as trustees for the unnamed owners. Most believed they were investors from China, but no one really knew. I like to think it was Keyser Söze (the greatest trick he ever pulled was convincing the world he was a fictional character played by Kevin Spacey in the 1995 movie “The Usual Suspects”).
Sadly, the building was ignored by the new owners. No plans were announced. No repairs were made. Maintenance was not done. No cosmetic attention was performed on the exterior to make it less of an eyesore. The hotel remained the same neglected building but with new owners.
Then in 2014, the Lucas County Commissioners expressed an interest in acquiring the hotel and attempted to enlist partners to join in this venture. The Toledo-Lucas County Port Authority, City of Toledo, Regional Growth Partnership and the Building Trades Council were among those contacted. None were willing to commit to the deal, but the county, undeterred, ventured alone to purchase the property. A deal was reached and the county commissioners unanimously agreed to pay $1.38 million for the Hotel Seagate in November.
The unknown owner made a 130 percent profit on a $600,000 investment in just two years. The previous owners, National Republic Bank of Chicago, lost 87 percent ($4 million) of its $4.6 million investment in six and a half years. Hopefully they are a bank too big to fail.
At the time of purchase, the county commissioners actually committed, depending on the tax breaks, between $3 million and $3.5 million of taxpayer money — not the commissioners’ money — to this transaction. Lucas County residents, this is our money. The commissioners, acting on our behalf, paid $1.38 million for 0.16 acres of land in Downtown Toledo containing a vacant structure that has no commercial value. It does have plenty of problems, including asbestos contamination. The commissioners have stated they intend to demolish the structure. It will cost an estimated $2 million for environmental cleanup, demolition and site preparation or landscaping. Not until the deed was done did the commissioners begin the quest to find partners, private and public, to help with the costs and development.
What is the next use for this one-sixth acre of property? Certainly, a goal and business plan exist to justify the expenditure of precious taxpayer money, though none have been announced.
But commissioner Pete Gerken is not worried. It may be some time before this property is anything more than a vacant but nicely landscaped lot that doesn’t generate any taxes to repay the residents of Lucas County. But until that time, Gerken assures us that it “adds green space and livability and walkability and sustainability for our Downtown.” Who could ask for anything more?
In 1982, the commissioners voted to apply for a state loan to help fund the construction of a riverfront marketplace (Portside, Imagination Station today). Commissioner Ray Kest said, “It is usually not the role of the county to be involved in economic development, particularly in the Downtown of a city.” My how times have changed. Just say “economic development” and see how long it takes before some local government official finds you and says, “I’m in. What are we doin’?”
What are the lessons to be learned from this? First, the hotel business in Downtown Toledo is high-risk and low-return. The two other hotels on Summit Street — the Park Inn by Radisson and the Grand Plaza Hotel — had high construction costs and they have not held their value very well. They have high rates of name changes, which causes identity problems. Just covering the operating expenses is considered a successful operation. The two Downtown hotels are still making a go of it, but there is no demonstrated need for another Downtown hotel at this time, even though one of the stated goals of the county commissioners is to attract a nationally branded hotel to Downtown.
The second lesson is that when the Hotel Seagate was built, it was hailed as important for Downtown revitalization and economic growth. When the hotel failed and it was decided that the building should be demolished, it was said this is important for Downtown revitalization and economic growth. The idea that this clears the way for a new hotel, which is needed for Downtown revitalization and economic development, really doesn’t seem to make sense.
The third is that the more flowery and nonsensical the explanation any elected official or bureaucrat has for their actions, the more likely it is that they are trying to flim-flam you. If someone tells you that you can pay a nickel for corn and feed it to a chicken that will lay eggs that you can sell for 10 cents, that makes sense and is understandable. If, on the other hand, someone tells you that this is a quality-of-life issue that will assure peace, prosperity and understanding within the global village and is the solution to man-made climate instability in a zero-sum impact exercise to reduce income inequality and gender expression, you can be pretty sure they are being nonsensical.
After the Hotel Seagate purchase, the commissioners realized they needed to dip into reserves to cover the 2015 projected budget revenue shortfall. The possibility that spending could be reduced apparently wasn’t an option. The commissioners then chose the one and only course of action available to them to avoid this doomsday event in the future. On Jan. 20, they voted unanimously to raise the county sales tax rate to the maximum (1.5 percent) allowed by law. This is three times the county sales tax rate, 0.5 percent, paid in Summit County (Akron), which has 100,000 more residents than Lucas County. With this vote they assured $6 million to $7 million more revenue in 2015. Next year and for as long as people do retail business in Lucas County (which may be only another decade or so, at the rate we are losing population), the additional tax revenue is estimated at $14 million, adjusted for inflation and economic activity.
Commenting on the new tax rate, Commissioner Tina Skeldon Wozniak said the move was well-thought-out and officials believe taxpayers will recognize that the county commissioners are good stewards of their money. If these are the actions of good stewards, heaven help us if a band of drunken sailors ever get their hands on the county’s coffers.
Gary Kiss can be reached at letters@toledofreepress. com.
